Carrier Conference of the American Trucking Associations in Los Angeles on October 20, 1959, remarked:9

There is not the slightest doubt in my mind that the Congress directed the Commission by Section 15 (a) (3) of the Act to permit more competition between the various modes of transportation; to adopt a more liberal attitude toward competitively inspired rate reductions; and to show a somewhat greater respect for managerial discretion. It is equally clear that the Congress did not intend to sanction unfair or destructive competition. However, competition which is destructive in fact is not necessarily destructive as a matter of law. But any rate reduction which is not designed to maximize net revenues but to drive a weaker rival out of business should be condemned by the Commission. Section 15 (a) (3) did not revive the law of the transportation jungle in which only the strongest carriers, but not necessarily the fittest, can hope to survive.

Another leader in the transportation and traffic management field, Mr. J. C. Scheleen, Editor, Traffic World, expresses concern with our statement:10 that close consideration of Section 15 (a) before and after the 1958 changes failed to support the view that railroad management had increased discretion and pricing independence as a result of those changes. Mr. Scheleen continued:

Was it the intent of Congress, in revising Section 15 (a), to bring about no alteration at all in the ratemaking process? We don't think that the answer to that question is "Yes."

Comparison of 1940 and 1958 Status of Section 15(a)-We do not quarrel with the opinion of these worthy gentlemen that it was the intent of Congress to effect some changes in the way the Interstate Commerce Commission was applying the rule of ratemaking, in view of the testimony at the Smathers Subcommittee hearings and the desire to ameliorate the unsatisfactory conditions noted there. The railroads certainly hoped and stated publicly that their managements had increased discretion in formulating and applying fully compensatory rates, although the motor carriers, naturally, thought less kindly of the purported change.

What is the difference between saying in paragraph (3):

In a proceeding involving competition between carriers of different modes of transportation subject to this Act, the Commission, in determining whether a rate is lower than a reasonable minimum rate, shall consider the facts and circumstances attending the movement of traffic by the carrier or carriers to which the rate is applicable.

and what had already been said in paragraph (2) by the 1940 Act that:

9 I. C. C. Practitioners' Journal, Vol. XXVII. No. 3, pp. 275-276. 10 Traffic World, issue of December 19, 1959, p. 13. Mr. Scheleen's remarks were an appended comment to a letter written by Mr. C. E. Widell, Transportation Director, Tennessee Manufacturers' Association, Nashville 3, Tennessee.

In the exercise of its power to prescribe just and reasonable rates the commission shall give due consideration, among other factors to the effect of rates on the movement of traffic by the carrier or carriers for which the rates are prescribed. . .

The I. C. C. has to consider all pertinent factors in evaluating the question of rate reasonableness, with the very definite obligation under paragraph (2) that their view as to whether a fully compensatory rate was proper was not to be based on the effect that it would have on the traffic of any other carriers than those for which the rate was prescribed. This, certainly, is quite broad enough to include clearly competition between carriers of "different modes of transportation as included in the 1958 change in paragraph (3). So, where is the change? It is not evident. Further, in saying that "rates of a carrier shall not be held up to a particular level to protect the traffic of any other mode of transportation. . .," there is no change in evident application, for the paragraph (2) provisions automatically eliminate any necessity of consideration of the effect on the traffic or carriers other than those for which the rates are prescribed.

The basic question in this paper is whether carrier management pricing discretion is greater since the Transportation Act of 1958 and whether the Commission now has any greater or lesser authority in this area of ratemaking. The inclusion in paragraph (3) of section 15 (a) of a reference to the National Transportation Policy may provide some reason for the belief that inclusion therein as a substantive provision may give the I. C. C. increased authority to disregard the rule of ratemaking and invoke the "destructive practices" portion of the policy, but it certainly does not give rail carrier management the increased freedom in establishing competitive pricing on a fully compensatory basis, as they had hoped and indicated that it did. The Commission, so far as we can determine, has not reconciled anywhere with clarity the process by which they rationalize the conflict of "inherent advantages" with "destructive rate practices."

In Eastern Central Motor Carriers Association v. United States,11 the high court ruled:

The Commission is charged with seeing that rates and services of rail, motor and water carriers are coordinated in accordance with the National Transportation Policy, which, among other things, was designed to eliminate destructive competition not only within each form but also between or among the different forms of carriage.

The confusion induced by the two-headed regulatory policy which gives one delineation in one place and an entirely different treatment in another is illustrated by the fact that on the same page in the Annotated Acts which includes this citation 12 contains the following:13

11 321 U. S. 194 (206).

12 Vol. 12, p. 10109.

13 Rubber Products between Southern and Ohio Points, 41 M. C. C. 93 (98).

Mere reduction of a rate does not constitute an unfair or destructive competitive practice. Equalization of competition by imposition of a rate differential on a competing, more efficient mode of transportation, must be denied as inconsistent with the National Transportation Policy.

There seems to be no question but that the thought in the Eastern Central case that coordination of rates is necessary to prevent the fully compensatory rate from becoming a destructive basis because it is a level which the higher cost carrier cannot meet is in direct conflict with the Commission's finding in the Rubber Products case that umbrella ratemaking is improper as violating the National Transportation Policy. The juxtaposition of these two cases gives rise with considerable pertinence to the feeling that fully compensatory rates violate the National Policy if they are not coordinated to permit continued participation of other than the ratemaking carrier in the traffic (U. S. Supreme Court in the Eastern Central case) and, conflicting, they violate the same policy if they involve the imposition of any basis higher than one based on costs rather than to protect other than the ratemaking carrier (the I. C. C. view in the Rubber Products case).

There are those who contend that there is no such thing as umbrella ratemaking, but there is evidence to the contrary. A direct example of the application of this principle by the Interstate Commerce Commission is cited in an editorial in Railway Age, (February 18, 1957, page 46) in which the writer states that "the fact is that anti-economic ratemaking by the I. C. C. goes on all the time."

The case in question involved rates applicable on a movement of gasoline from Friendship, North Carolina, to points in West Virginia and Virginia. For distances over 75 miles, rail costs were lower than those of the motor carriers for comparable hauls. From Friendship to Abingdon, Virginia, the fully distributed costs of the railroads were 22.9 cents while motor carrier costs were 26.1 cents per 100 pounds. The rails proposed lowering their 25 cent rate to 24.5 cents; this compared to a truck rate of 25.9 cents, 1.4 cents differential. The Interstate Commerce Commission found that where the rail rates were 1.5 cents under their competitors, the rails secured 75 percent of the traffic. Accordingly, to protect what they regard as the fair share of the motor carriers, the I. C. C. imposed a limitation that the "railroad rates should not be more than 1 cent under the truck rate."

The concluding clause of paragraph (3), "giving due consideration to the objectives of the National Transportation Policy declared in this Act," imposed on to the I. C. C. no obligations or standards other than those which were in the Interstate Commerce Act in 1940, for the concluding statement of the Policy as it stood at that time was that "All of the provisions of this Act shall be administered and enforced with a view to carrying out the above declaration of policy.' The $64,000 question is "What is the policy and where is the consistency on which we should be able to depend?"

Conclusion

Shippers and carriers, whether of the same mode or of different modes, are in no different position since 1958, as to knowing what is possible for them or what may face them, than they were following the changes made in Section 15 (a) by the Transportation Act of 1940. The I. C. C., of course, did not change the law as it stood in the period from the latter enactment to some time subsequent to the New Automobiles case ruling, but there does not seem to be much doubt that, in some cases, at least, they changed their interpretation of the law. When they stated, as they did in that case:

There appears no warrant for believing that rail rates, for example, should be held up to a particular level to preserve a motor-rate structure, or vice versa. (emphasis supplied)

they were applying an interpretation which seems justified by the Act as it stood at that time and after it as well, although subsequent to this ruling they changed the "rules of the road" and invoked the destructive practices clause as justification for applying their own views as to allocation of traffic as between modes of transportation.

What Congress intended and what change was actually made in section 15(a), paragraph (3) by the Transportation Act of 1958 are two different things. The Paint case does not apply a delineation of the I. C. C.'s interpretation of law which will stand as even an approximate guide as to the direction which the I. C. C.'s decisions will take in the future. It cannot be taken as a dependable criterion. If it could be taken as such a criterion, it would not have been necessary for Commissioner Webb to say:14

In my judgment, the Commission has a duty, not only to reach the right result in any particular case, but with each case arising under Section 15 (a) (3) to give carriers and shippers a little better idea of where they stand. (emphasis supplied)

The new controls added supposedly by paragraph (3) are not evident. As the matter now stands, the present standards of the revised Rule of Ratemaking are the same now as they were following 1940. All of those concerned in the manner of this interpretation of this very important rule are subject to the possibility that the I. C. C., as it sees proper, may disregard the rule entirely and invoke the National Transportation Policy as a justification of their so doing.15

14 I. C. C. Practitioners' Journal, op. cit.

15 Our interpretation has been a treatment of this question as we see it. If there is a really new directive in paragraph (3), we would like to have it pointed out to us.

Interstate Commerce Commission

First Organization and Procedure Report of I. C. C. Special Advisory Committee

The first report of the Special Advisory Committee on Interstate Commerce Commission Practices and Procedures, designated as "Report on Commission's Organization and Internal Procedure," was released by the Interstate Commerce Commission, November 9, 1960.

This committee was created by the Chairman of the Commission in 1959 to make recommendations for improvement of the Commission's practices and procedures. Its membership, which includes practitioners from the Association of I. C. C. Practitioners and the Motor Carrier Lawyers Association, is designed to be representative of all types of practice before the Commission.

There are some twenty recommendations contained in the report. According to the Commission, these recommendations are already under active consideration by it with a view to adoption of those which promise to improve organization and functioning of the Commission.

Giving a great deal of their own time and money to the study of Commission procedures, the 18 members of the special committee, drafted the report and had it printed. The conclusions and recommendations. in this first report represent the thinking of the committee, free of any directives from the Commission.

Notice of Proposed Rulemaking

The Interstate Commerce Commission announced in its notice of November 7, 1960 an extension to and including January 15, 1961, of time for interested parties to file with the Commission written views and comments on proposed rulemaking in Docket 33581, General Accounting Regulations Under the Interstate Commerce Act, (49 CFR 25) Financial Statements To Be Consistent With Accounting Regulations. Notice of proposed rulemaking was published in the Federal Register, issue of October 15, 1960, at page 9906 and November 15, 1960 was the terminal date earlier set for filing written views and comments.

Amendment No. 2, I. C. C. General Rules of Practice

Amendment No. 2, I. C. C. General Rules of Practice, adopted and made effective October 11, 1960 (25 F. R. 10062 10/21/60) is as follows: It is ordered, That the title of § 1.243 and paragraphs (a) and (c) (1) be amended to read as follows:

§ 1.243 Special Rules governing notice of filing of applications by motor carriers of property under section 7 (c) of the Transportation Act of 1958, by motor and water carriers of persons and property under sections 206 (a) (4), 206 (a) (5), 209 (a) (4), 209 (a) (5), 309 (a) and 309 (f), and by freight forwarders of property under sections 410(a)(2), and 410(a)(3) of the Interstate Commerce Act, as amended July 12, 1960, and certain other procedural matters with respect thereto.